Stocks to buy in October: Lupin, Federal Bank, Prestige Estates, among Axis Securities’ top mid-cap, small-cap picks

Indian stock market indices, Sensex and Nifty 50, extended their losing streak for the fifth consecutive session on Friday dragged by concerns over escalating tensions in the Middle East amid the ongoing conflict between Iran and Israel.

The domestic equity market witnessed a strong rally last month, but has been on a downward trend since the beginning of October due to negative global cues.

Axis Securities continues to believe in the long-term growth story of the Indian equity market. With increasing Capex enabling banks to improve credit growth, it believes the Indian stock market is well-supported by a favourable structure emerging.

“However, with current valuations offering limited scope for further expansion, an increase in corporate earnings will be the primary driver of the market returns moving forward. Hence, bottom-up stock picking with a focus on ‘growth at a reasonable price’ and ‘Quality’ would be keys to generating satisfactory returns in the next one year,” Axis Securities said.

In its base case, the brokerage firm maintained its March 2025 Nifty 50 target at 24,600 by valuing it at 20x on March 2026 earnings. In the bull case, Axis Securities values Nifty 50 at 22x and has a target of 27,000, while its bear case target for Nifty 50 is 19,700.

Axis Securities has recommended seven midcap and smallcap stocks to buy in October. The brokerage firm expects an upside potential of up to 20% in these stock picks.

The mid-cap and small-cap stocks to buy in October include Aurobindo Pharma, Lupin, Dalmia Bharat, Federal Bank, Prestige Estates, Sansera Engineering, and J Kumar Infraprojects.

Here are October stock picks by Axis Securities:

Aurobindo Pharma | Target Price: ₹1,730

Axis Securities believes Aurobindo Pharma has several growth levers to drive the topline of the company. The brokerage has a target price of ₹1,730 apiece for Aurobindo Pharma shares.

Lupin | Target Price: ₹2,500

Lupin’s margins, currently at 18%, are still below the industry levels of 22%, which implies a significant scope for margin improvement in the upcoming quarters. This improvement will also be supported by the macro environment, which is currently favourable for the industry, such as falling raw material prices, low logistic costs, and fuel costs, Axis Securities said.

It has a target price of ₹2,500 for Lupin shares.

Dalmia Bharat | Target Price: ₹2,150

Dalmia Bharat is projected to achieve robust growth between FY24 and FY26, with an estimated CAGR of 9% in volume, 8% in revenue, 11% in EBITDA, and a substantial 21% in adjusted PAT.

The brokerage firm has set Dalmia Bharat share price target of ₹2,150.

Federal Bank | Target Price: ₹230

While Axis Securities believes Federal Bank remains well positioned to deliver a sustainable RoA of 1.3%, improving NIMs backed by shifting portfolio mix towards higher-yielding products would be a key enabler for the bank to deliver RoA of 1.4% and would drive the next leg of stock re-rating. It expects Federal Bank to deliver RoA/RoE of 1.3-1.4%/14-16% over FY25-27E supported by steady NIMs, gradually improving the Opex ratio and stable credit costs.

Prestige Estates | Target Price: ₹2,195

Axis Securities maintains a ‘Buy’ recommendation on Prestige Estates shares supported by the company’s diversified business model, execution supremacy, robust order book, and strengthening annuity streams. It has Prestige Estates share price target of ₹2,195 apiece.

Sansera Engineering | Target Price: ₹1,875

In light of attributes such as higher sales mix in Non-Auto ICE components, higher International business (exports), focused approach on improving margin trends, Sansera Engineering’s capability to generate strong operating cash flows, and capacity expansion plans, Axis Securities expects Revenue, EBITDA, and PAT to grow at CAGRs of 17%, 20% and 22% respectively over FY24-26E.

J Kumar Infraprojects | Target Price: ₹950

Considering strong and diversified order book position, healthy bidding pipeline, new order inflows, emerging opportunities in the construction space, the company’s efficient and timely execution and strong financial credence, the brokerage firm expects J Kumar Infraprojects to report Revenue, EBITDA and Adj. PAT CAGR of 16%, 18% and 22%, respectively, over FY24-FY26E.

It has a target price of ₹950 apiece for J Kumar Infraprojects shares.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.